23 Apr: Forecast: FX: US$/Majors + trade ideas

By | April 23, 2018

 

EURUSD: 1.2287
EurUsd traded heavily through the Friday session in falling to new 2 week low of 1.2250 – albeit very briefly. It may be a bit choppy to start the week as traders wait on Thursday’s ECB meeting although today’s PMIs may provide some directional trade. Overall though, talk of the ECB waiting until July to signal the end of QE looks set to weigh on the Euro until Thursday.
1 hour/4 hour indicators: Mixed.. Daily Indicators: Neutral Weekly Indicators:  Possible topping formation.
Preferred Strategy:  The short term momentum indicators look a little heavy on Monday although the hourlies are now a little oversold and may need to do some correctional work to the topside, where 1.2300 and 1.2325 will provide the initial resistance, and I doubt we see it above here today. If wrong look for a squeeze back towards 1.2350.  Further out, 1.2375 and 1.2400 would see good sellers, above which we could then head back towards 1.2415/20 and even towards 1.2470/75.

The 4 hour charts look heavy though, and if we make a sustained run below the rising trend support, currently at 1.2280 then we could move back towards Friday’s low  (1.2250) and then to  1.2215, the Apr 6 low, which will also remain strong support. This looks likely to hold today, although a break of 1.2200 could then head towards Fibo/100 DMA support at 1.2170/75, below which would target 1.2085 and possibly 1.2025 although this remains over the horizon for now.

I remain fairly neutral while this choppy trade persists, but given the speculative long Euro positioning and rising US bond yields, I still prefer the downside in the medium term and would look to sell rallies today at around 1.2300, with a SL placed above 1.2350, but looking for 1.2215 and then 1.2180/90 which should be decent support if/when we get there.

Sell EurUsd @ 1.2300. SL @ 1.2350, TP @ 1.2185

Resistance Support
1.2399 19 Apr high 1.2280 Rising trend support
1.2375 Minor 1.2250 Friday low
1.2350 Daily cloud top/ 200 HMA 1.2215 6 Apr low
1.2325 Daily Tenkan 1.2190 100 DMA
1.2300 Minor 1.2172 (38.2% of 1.0340/1.2555)

Economic data highlights will include:

M: EU/US Markit Manufacturing/Services/Composite PMIs, Chicago Fed National Activity Index, US Existing Home Sales

T:  German IFO Business Climate/Expectations, Case Shiller House Price Index, US New Home Sales, House Price Index, Richmond Fed Mfg Index, API Weekly Crude Oil Stock Inventory

W:  EIA Crude Oil Stocks Weekly Change

T: German Consumer Confidence, ECB Interest Rate Decision/Press Conference, US Goods Trade Balance – Mar, Preliminary Wholesale Inventories – Mar,   Durable Goods Orders –Mar, Kansas Fed Mfg Activity

F: Economic Sentiment Indicator, Industrial Confidence, Services Sentiment, Business Climate, Consumer Confidence US Preliminary Q1 GDP, US Personal Consumption/Expenditure, Michigan Consumer Sentiment Index, Baker Hughes Oil Rig



USDJPY: 107.63
US$Jpy headed up to 107.84 on Friday before reversing a little lower into the week’s close, to finish at 107.62. Overall, the pair remains firm despite  the weaker equities markets on Friday, but with the dollar firmly underpinned by rising US Treasury yields. BOJ  due Friday; No change expected.
1 hour/4 hour indicators: Mixed. Daily Indicators: Turning higher? Weekly Indicators:  Turning higher
Preferred Strategy:  As before, the daily momentum indicators retain a mildly constructive bias and look as though they are building up for another move higher. The weeklies are also turning up so sentiment does look to be improving for US$Jpy although the short term charts look neutral on Monday and a fairly neutral stance is again required, but technically, buying dips still seems to be the plan.

On the topside, back above the Friday high of 107.84, would find offers nearby, at 107.90 (21 Feb high) above which, 108.05/10 would then be a target. A break of this would allow a run to 108.45/50 and then to 109.80 although this remains some way off.

On the downside, buyers will be seen at 107.50 (minor), at 107.35 and at 107.15/20 ahead of 107.00. Below there would open up the 17 Apr low at 106.87 ahead of good support at 106.55/65. Below here could see a reverse towards 106.20, 106.00, and possibly towards the 3 April low of 105.68 although this seems unlikely right now.

Note the possibility of a reverse SHS formation with the neckline at Friday’s high. A positive topside break would target somewhere near 110.70.

As before, if stocks turn sharply lower again, potentially taking US$Jpy along for the ride despite the currently positive medium term indicators, a move back below the 200 MMA (105.60) would open the way to 105.30, a break of which would allow a return to 104.60. Below that, there is little to support the dollar until 103.50 – This currently looks well beyond the horizon, and overall, while the dailies remain positive, I prefer to be trading from the long side and looking to buy dips.

Buy US$Jpy @ 107.40. SL @ 106.85, TP @ 108.45

Resistance Support
108.45 (38.2% of 114.73/104.60) 107.34 Friday low
108.25 Minor 107.18 19 Apr low
108.08 (38.2% of 113.75/104.60) 106.98 18 Apr low
107.90 21 Feb high 106.87 17 Apr low /Daily cloud base
107.84 Friday high 106.61/64 9/10 Apr lows /11 Apr low

Economic data highlights will include:

M: Nikkei Flash Mfg PMI

T:  All Industry Activity Index

W:

T:

F: Tokyo CPI, Industrial Production, Retail Sales, BOJ Meeting/Interest Rate Decision/Statement/Outlook



GBPUSD: 1.4003
Cable remained under heavy pressure on Friday as it continued to suffer from Carney’s comments on Thursday, in his dovish shift in BoE expectations for a May rate hike.  Friday saw a low of 1.4001, where it closed on its lows, and looks heavy at the start of the week. Note that EurGbp made a bullish key-reversal last week, signalling the chance of further pressure on Sterling coming via the cross.
1 hour/4 hour indicators: Turning lower Daily Indicators: Turning lower? Weekly Indicators:  Turning higher?
Preferred Strategy:   The hourlies are oversold but with the 4 hour momentum indicators pointing sharply lower, a break of 1.4000 would allow a run to 1.3965, below which there is not too much to stop a run towards 1.3915 and even to 1.3865 (76.4% of 1.3710/1.4376).

On the topside, sellers will arrive today at minor levels at 1.4040 and 1.4060 ahead of Fibo levels at 1.4090 and further out at 1.4145 although this looks unlikely to be seen. If wrong, then a run back to 1.4200 would be on the charts but appears unlikely.

Take a nimble stance today, but technically is does appear that further downside pressure may come about, looking for a run towards 1.3965.

Resistance Support
1.4145 (38.2% of 1.4376/1.4001) 1.4010 Rising trend support
1.4125 Minor 1.4001 Friday low
1.4090 (23.6% of 1.4376/1.4001) 1.3965 (61.8% of 1.3710/1.4376)/5 Apr low
1.4060 Minor 1.3940 Minor
1.4040 Minor 1.3913 19 Mar low

Economic data highlights will include:

M:

T:  Public Sector Net Borrowing Requirements, CBI Distributive Trade Survey – Orders

W:

T: CBI Distributive Trade Survey – Realised

F: Consumer Confidence, Preliminary Q1 GDP



USDCHF: 0.9746
US$Chf had another squeeze higher on Friday as it moved up from 0.9705 to 0.9759 before closing at 0.9745.
1 hour/4 hour indicators: Turning higher Daily Indicators: Turning higher Weekly Indicators:   Turning higher
Preferred Strategy:  The short term momentum indicators still look positive for further gains and there is no change to the view of trading from the long side, although the hourlies may be hinting at some monor bearish divergence. As long as we remain above the rising trend support I prefer to buy the dips although the recent acceleration higher has now seen the pair move away from the trendline, which currently lies some way off, at 0.9590.

The longer term momentum indicators look as though they may be picking up a bit of speed and beyond 0.9760/65 could see a run towards 0.9800/10 and then on to 0.9835 although possibly not today. If wrong, further gains could open the way to 0.9900 and then to 0.9975/1.0000.

On the downside, the initial support will be seen at 0.9720 and at Friday’s low of 0.9705. If the dollar falls back below the 0.9690 (200 WMA/Weekly cloud base), we could then see a return to the 200 DMA/18 Apr low at 0.9655/50, below which stops would be triggered and we could see a return to 0.9600, although that currently looks unlikely.

Buy US$Chf @ 0.9710. SL @ 0.9675, TP @ 0.9825

Resistance Support
0.9835 (76.4% of 1.0038/0.9187) 0.9705 Friday low
0.9815 11 Jan high 0.9690 200 WMA/Weekly cloud base
0.9800 Minor 0.9666 19 Apr low
0.9765 (50% pivot of 1.0343/0.6187) 0.9655/50 200 DMA /18 Apr low
0.9758 Friday high 0.9590/85 (23.6% of 0.9187/0.9723/ Rising trend support  /100 DMA

Economic data highlights will include:

M:

T:  Trade Balance

W:

T:

F:



AUDUSD: 0.7669
The Aud had a tough session on Friday in falling to a low of 0.7654 before closing the week at 0.7670, after earlier seeing a high of 0.7731. Strong US bond yields did much of the damage, with the US/AU 10 year spread widening to 145bp on Friday, up from a low of just 56bp on Wednesday. A soft Australian CPI on Wednesday would see this widen further and keep the pressure firmly on the downside.
1 hour/4 hour indicators: Mixed. –Turning lower. Daily Indicators: Neutral Weekly Indicators:  Neutral
Preferred Strategy:   The Aud has seen some damage done at the end of the week and is now back at 0.7670 after having tested the medium term base in the 0.7640/50 range (9 April low – 0.7651). This area needs to be taken out in order to allow further downside progress towards the next major levels at 0.7635/40. Below here would then move towards the major rising trend support from January 2016, at 0.7600, although that may take a while. If/when 0.7600 does get taken out, look for an accelerated move towards the December low at 0.7500, with only minor support in the 0.7500/0.7600

On the topside, resistance will be seen at 0.7690/00, which if seen today would be a reasonable sell level, I suspect. Above 0.7700 would allow a run to 0.7715 and to 0.7730 although this looks rather doubtful.

Selling rallies is preferred.

Sell AudUsd @ 0.7700. SL @ 0.7740, TP @ 0.7625

Resistance Support
0.7775 (76.4% of 0.7813/0.7654) 0.7652/54 9 Apr low/Friday low
0.7745 200 WMA /(61.8% of 0.7813/0.7654) 0.7640/35 100 WMA / 29 Mar low/(61.8% of 0.7328/0.8135)
0.7733 (50% of 0.7813/0.7654) 0.7600 Rising trend support
0.7715 (38.2% of 0.7813/0.7654) 0.7580 Minor
0.7690 (23.6% of 0.7813/0.7654) 0.7550 Minor

Economic data highlights will include:

M:

T:  CPI

W:  ANZAC Holiday

T: Import/Export Index

F: PPI



NZDUSD: 0.7207
 The Kiwi, as with the Aud on Friday, had a tough session ion falling from 0.7280 to a low of 0.7200 which has so far held but looks rather precarious at the start of the week.
1 hour/4 hour indicators: MixedTurning lower. Daily Indicators:  Turning lower Weekly Indicators:  Turning Neutral
Preferred Strategy:   The short term momentum indicators look mixed today, but overall they seem to be hinting at lower levels ahead. If so, good support lies at 0.7185, a break of which could see an acceleration towards 0.7150/55 and eventually towards 0.7100/10.

On the other hand, a topside squeeze would allow a squeeze back to 0.7225 and to 0.7245. Beyond that, would allow for 0.7285/80 and then 0.7295/00 would come into play but this seems unlikely.

Sell NzdUsd @ 0.7235. SL @ 0.7280, TP @ 0.7125

Resistance Support
0.7295 (50% of 0.7395/0.7200) 0.7210 (76.4% of 0.7153/0.7395)/100 DMA
0.7275 (38.2% of 0.7395/0.7200) 0.7200 Friday low
0.7260 Minor 0.7186 29 Mar low/200 DMA
0.7245 (23.6% of 0.7395/0.7200) 0.7165 Minor
0.7225 Minor 0.7152 21 Mar low